Sacramento City Unified board approves second interim showing multiyear shortfall, directs deeper fiscal review

The Sacramento City Unified School District board on Wednesday approved the district's second interim financial report after a staff presentation that outlined a persistent multiyear deficit and several large adjustments to revenues and expenditures.

A staff member presenting the report told the board that general-fund unrestricted revenues were revised upward from about $502,000,767 at first interim to roughly $510,000,000 at second interim, driven in part by an updated local control funding formula calculation (about $2,600,000) and improved transitional kindergarten average daily attendance. The presenter said the district also recognized about $12,300,000 in other state revenue and that an adopted transportation plan accounted for about $7,800,000 in additional revenue to help offset transportation costs borne by the general fund.

On the expenditure side, the presenter described reconciliations to certificated and classified salaries, vacancy-savings adjustments and a restatement of benefits that increased reported benefit expenses (the presenter cited $31.4 million and $11.7 million entries reducing and then restating benefits that together changed the net benefits presentation). The staff member also said special-education costs were increased by an additional $18,000,000 to complete the year and noted use of one-time interfund transfers from funds 67 and 68 to help balance the general fund in the short term.

The presentation emphasized the district's multi-year projection, which showed continuing pressures into 2026-27 and 2027-28. The presenter described a projected negative net position in the multi-year outlook and said that previous reductions and one-time steps were not sufficient to eliminate the structural deficit; staff recommended a broader restructuring plan to address a sizeable shortfall over multiple years. The staff member also reported a second-interim cash-flow ending balance of $4,900,000 and introduced an interactive budget dashboard intended for board and community use.

Public comment echoed concerns raised in the presentation. Carl Pinkston said he was "very concerned" about large swings in the special-education line, citing an increase from about $152,000,000 to $172,000,000 and asking for a breakdown of special-education spending by object code. "I haven't heard a clear explanation on why all the changes that have taken place," Pinkston said.

Terrence Gladney told the board the district often operates in silos and warned that supplemental LCFF dollars should be reinvested in the students who generate them rather than used to subsidize other district expenses. "We operate too often in silos," Gladney said, and urged the board to prioritize investments for students from historically underserved groups.

Board members questioned the technical presentation details and the timing of document postings. One member asked why the reserve for economic uncertainty is shown as zero across the projection; staff explained the reporting model will not allow a reserve entry when the projection shows a negative balance. Multiple members urged taking deeper review and recommended the budget committee perform a more extensive dive into the second interim and related implementation steps.

A board member described a list of implementation gaps and what they called resistance to board direction from parts of the staff, saying earlier board-directed reductions were not implemented with fidelity and pointing to $80,000,000 in unexpected spending that contributed to the district's fiscal strain. The presenter responded that district leadership and the cabinet are engaged and that the work to restructure and prioritize will need to expand across departments.

Chair moved to approve the second interim; Member Kayeata moved and Member Singh seconded. The board recorded unanimous 'Aye' votes and approved the report. Members and staff agreed on next steps including additional budget-committee work, further development of the fiscal-solvency plan and preparing a third interim (staff said the district plans to prepare a third interim through March 31 to support a May 7 submission request).

The board's approval does not itself adopt any new program changes; it acknowledges the district's financial position at the second interim and starts a process of deeper review and restructuring work the board and staff said is necessary to move toward a sustainable operating plan.